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Unformatted text preview: Chapter 09  Audit Sampling CHAPTER 9 Audit Sampling Review Questions 91 Nonstatistical sampling is an audit sampling technique in which the risk of sampling error is estimated by the auditors using professional judgment rather than by the laws of probability. Statistical sampling involves the quantification of the risk of sampling error through the use of mathematics and laws of probability. 92 Sampling risk is the possibility that the auditors will make an erroneous decision based on a sample result. To control sampling risk the auditors increase the size of their samples. Nonsampling risk is the risk of erroneous conclusions by the auditors based on any factor other then sampling. For example, the auditors may perform inappropriate tests, or they may not recognize errors in the sample items examined. Nonsampling risk may be controlled by adequate planning and supervision of engagements, and the establishment of effective quality control policies and procedures. 93 The physical representation of the actual population is the recorded value that represents the population. For example, if the auditors use a computer printout of recorded accounts payable from which to sample, they must attempt to determine that it properly includes all accounts payable. 94 All three of the methods of selecting items for examination (random number table selection, systematic selection, random number generator selection) will produce a random sample if properly applied. However, when using systematic sampling on a population that is not in random order it may be necessary to stratify the population into segments, or to use a relatively large number of starting points to produce a random sample. 169 Chapter 09  Audit Sampling 95 "Systematic selection" in auditing means drawing every nth item from the population of items to be sampled. For example, the auditors might draw every tenth check from a file of paid checks. To help insure a random sample, the auditors should ascertain that the population is in random sequence, and is not, for example, classified by size of check. If the population is not in random order, the auditors may be able to stratify it into segments, each of which is in random order. They may also guard against a nonrandom sample by using several random starting points. Systematic selection is easily applied to unnumbered documents merely by counting off the sampling interval between documents to be selected. 96 Sampling without replacement means that once an item is drawn for inclusion in a sample, it is not replaced into the population prior to drawing the remaining items. Therefore, one item cannot be included more than once in a given sample. Sampling with replacement means that selected items are replaced into the population prior to drawing the next item. Under this method, it is possible for one item in the population to be drawn several times, thus representing several sample items in a given sample....
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This note was uploaded on 08/28/2011 for the course ACCOUNTING 423 taught by Professor K during the Spring '11 term at San Diego.
 Spring '11
 K

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